Bluedominoes' Linda Manaster and Fabrice Poigin checked out the packaging on the Rancho Sante Fe's company's line of products. Manaster came up with the initial product idea. (Eduardo Contreras / Union-Tribune)

Bluedominoes' Linda Manaster and Fabrice Poigin checked out the packaging on the Rancho Sante Fe's company's line of products. Manaster came up with the initial product idea. (Eduardo Contreras / Union-Tribune)

Bluedominoes' organic Activity Dough for budding artists is free of heavy metals, gluten, milk, nuts and allergens. A school in Delaware is using the company's products.

Bluedominoes' organic Activity Dough for budding artists is free of heavy metals, gluten, milk, nuts and allergens. A school in Delaware is using the company's products.

With unemployment rising, bankruptcies soaring and credit tightening, this seems like the very worst time to be running a small business.

Or is it?

“A recession can be an ideal time to launch a startup company,” said Rhonda Abrams, president of The Planning Shop, a Palo Alto consulting firm that publishes advice books for entrepreneurs.

Abrams notes that more than half of the companies in the Dow Jones industrial average and Standard & Poor's 500 started in a recession or a depression, including such big names as Procter & Gamble, Disney, General Electric, Whole Foods and Microsoft.

“That's not a fluke,” she said. “When times are good, it can be difficult for small entrepreneurs to get a footing. But when times are bad, the big established companies often cut their services or production. There's less customer loyalty to older brands. Consumers are willing to try something new, especially if it's less expensive. That creates an opening for new companies to enter the market.”

Of course, even in the best of times, small businesses have a 50-50 chance of lasting more than five years. And during a recession, it's hard to get the financing needed to launch a business. Banks have tightened their lending standards. Rates on credit cards – which some entrepreneurs rely on for startup funding – have skyrocketed. Home-equity loans have virtually disappeared.

“There are challenges,” Abrams said. “But on the other hand, it's nice to start in an environment where the big guy down the street is also having problems. If you're hungry, hardworking, resourceful and intelligent, this can still be an incredibly good time to be an entrepreneur.”

This spring, the Ernst & Young consulting firm and the San Diego Regional Chamber of Commerce honored more than a dozen local entrepreneurial firms that fared reasonably well during the recession. To ride out the storm, some have cut costs or offered promotional sales, while others have developed niche products. But they're all optimistic that they'll survive the downturn.

Here are a few of their stories:

Cali-Bamboo: Going green

“Certainly there are adjustments that we've had to make during the recession,” said Jeff Goldberg, president of Cali-Bamboo, which sells bamboo building supplies and furnishings. “We've had to run lean and light. But things are looking good from our perspective. We're finding ways to maneuver.”

Cali-Bamboo, which was honored as the “emerging entrepreneur of the year” by Ernst & Young, was created in the wake of the last recession – the dot-com bust at the beginning of the decade. After the crash, Goldberg left his job as a biotech researcher and took a yearlong, around-the-world surfing trip with his friend Tanner Haigwood. Near the end of their trip, they were so low on cash that they took a job as bamboo harvesters in Hawaii. It was then that they decided to form a company to sell bamboo products.

They found a timely niche: green construction material. Bamboo not only produces more oxygen than trees of similar size but it's self-replenishing, growing to full size within three years of being cut, while some trees take more than 50 years.